PARAG DUSHYANT DESAI, MUMBAI V. ITO 32(2)(5), MUMBAI

ITA 557/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0198 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 557/MUM/2017 (A.Y. 2009 - 10) I.T.A. NO. 558/MUM/2017 (A.Y. 2010 - 11) SHRI PARAG DUSHYANT DESAI 12/8, LAKDI BUNDER DARUKHANA, REAY ROAD MUMBAI - 400 010. VS. ITO 32(2)(5) MUMBAI. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAEPD3511D ASSESSEE BY SHRI BHUPENDRA SHAH DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 2 4 . 8 . 201 7 DATE OF PRONOUNCEMENT 2 4 . 8 . 201 7 O R D E R BOTH T HE APPEAL S FILED BY THE ASS ESSE E ARE DIR ECTED AGAINST THE ORDER S PASSED BY THE LEARNED CIT(A) - 44 , MUMBAI AND T HEY RELATE TO A.Y. 200 9 - 1 0 AND 2010 - 11 . THE ASSESSE E IS AGGRIEVED BY THE DE CISION OF THE LEARNED CIT(A) IN CONFIRM ING THE DISALLOWANCE RELATING TO BOGUS PURCHASES . 2. THE A SSESSEE IS A DEALER IN FERROUS AND NON - FERROUS METALS . CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT T HAT CERTAIN DEALERS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING MATERIALS AND UPON NOTICING THAT THE ASSESSEE HAS PURCHASED GOODS FROM SUCH HAWALA DEALERS , THE ASSESSING OFFICER REOPENED THE ASSESSMENT S OF BOTH THE YEARS UNDER CONSIDERATION BY ISSUING NOTICE S U/S. 148 OF THE ACT. THE AGGREGATE AMOUNT OF PURCHASES MADE WAS RS.145.63 LAKHS AND RS.218.61 LA KHS RESPECTIVELY IN THE YEARS RELEVANT TO THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11. IN THE REOPENED ASSESSMENT, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH ALL RELEVANT DETAILS TO PROVE THE GENUINENESS OF THE PURCHASES. AFTER CONSIDERING T HE REPLIE S, THE ASSESSING OFFICER HELD THAT THE GENUINENESS OF PURCHASES WAS NOT PROVED AND ACCORDINGLY DISALLOWED 12.50% SHRI PARAG DUSHYANT DESAI 2 OF THE VALUE OF ALLEGED BOGUS PURCHASE S, WHICH WORKED OUT TO RS.18.20 LAKHS AND RS.27.32 LAKHS RESPECTIVELY IN AY 2009 - 10 AND 2010 - 11. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) CONFIRME D THE ADDITION MADE IN BOTH THE YEARS . AGGRIEVED, THE ASSESSE E HAS FILED THE S E APPEAL S BEFORE THE TRIBUNAL. 3 . LEARNED AR SUBMITTED THAT THE ASSESSEE HAS FURNISHED TO THE AO THE DETAILS OF PURCHASE S AND DE TAILS OF SALES MADE OUT OF THOSE PURCHASE S. HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED COPIES OF INVOICES, DELIVERY CHALLANS AND PAYMENT DETAILS TO PROVE THE GENUINENESS OF PURCHASES. ACCORDINGLY, LEARNED AR SUBMITTED THAT THE LD CIT(A) W AS NOT JUSTIFIE D IN CONFIRMING THE ADDITION MADE BY THE AO. THE LD A.R FURTHER SUBMITTED THAT THE G.P RATIO DECLARED IN THE EARLIER YEARS WAS IN THE RANGE OF 2.5% TO 6% ONLY. ACCORDINGLY HE SUBMITTED THAT THE ADDITION @ 12.50% IS ON THE HIGHER SIDE. 4 . LEARNED DEPARTME NTAL REPRESENTATIVE, ON THE CONTRARY, SUBMITTED THAT THE AO AS WELL AS LEARNED CIT(A) HAS GIVEN PROPER REASONING FOR CONFIRMING THE ADDITION. ACCORDINGLY, SHE SUBMITTED THAT ENTIRE ADDITION HAS BEEN RIGHTLY SUSTAINED BY LD CIT(A). 5 . I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. I NOTICED THAT THE ASSESSEE HAS FURNISHED COPIES OF PURCHASE BILLS AND PAYMENT DETAILS . THE ASSESSEE HAS ALSO MADE ONE TO ONE RECONCILIATION OF PURCHASES AND SALES. THE ASSESSEE HAS , HOWEVER, FAILED TO FURNISH ANY PROOF TO SHOW THAT THE MATERIALS WERE PHYSICALLY TRANSPORTED TO THE PREMISES OF THE ASSESSEE. THE LEARNED AR ALSO FAIRLY CONCEDED THAT THE ASSESSEE DOES NOT HAVE COPIES OF TRANSPORT BILLS , AS ACCORDING TO LD A.R, THE MATERIALS WERE DIRECTLY SENT TO CUSTOMERS SITE . HOWEVER HE COULD NOT SUBSTANTIATE HIS SUBMISSIONS. SINCE THE ASSESSEE HAS RECONCILED THE PURCHASE AND SALES, I AM OF THE VIEW THAT THE AO HAS RIGHTLY ADDED THE PROFIT ELEMENT EMBEDDED IN THE PURCHASE S, AS GOODS CANNOT BE SOLD WITHOUT MAKING CORRESPOND ING PURCHASES. SINCE THE IMPUGNED SUPPLIER S HA VE BEEN NAM ED AS HAWALA DEALER S AND SINCE THE ASSESS EE COULD NOT PRODUCE THOSE SHRI PARAG DUSHYANT DESAI 3 PARTIES BEFORE THE AO , ONE OF THE POSSIBLE VIEW S IS THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL S FROM SOME OTHER PERSON. 6 . THE LD A.R SUBMITTED THAT THE ESTIMATION OF PROFIT AT 12.50% IS ON THE HIGHER SIDE, SINCE THE VAT RATE APPLICABLE TO THE ITEM S DEALT WITH BY THE ASSESSEE IS ONLY 4%. CONSIDERING THIS FACT AND ALSO THE RATE OF G.P DECLARED BY THE ASSESSEE AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL AT LOWER RATE, I AM OF THE VIEW THAT THE ADDITION MAY B E SUSTAINED TO THE EXTENT OF 8 % OF THE VALUE OF ALLEGED BOGUS PURCHASE S . ACCORDINGLY I MODIFY THE ORDER S OF THE LEARNED CIT(A) ON THIS ISSUE IN BOTH THE YEARS UNDER CONSIDERATION AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION IN BOTH THE YEARS TO THE EXTENT OF 8 % OF THE VALUE OF ALLEGED B OGUS PURCHASES . I ORDER ACCORDINGLY. 7 . IN THE RESULT, BOTH THE APPEAL S FILE D BY TH E ASSESSE E ARE PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 4 . 8 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 4 / 8 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI